The great bulk of the business of the Bank of England consists of the management of the National Debt, the issue of bank notes, and public and private banking.
Each of these branches forms a separate department, conducted by a superior official of the Bank.
The stock department is entrusted with the management of the National Debt, and of several other public loans guaranteed and controlled by the State; such as those issued by the Government of India, by the Australian and New Zealand colonies, by the Egyptian Government, etc., according to special resolutions passed by the Legislature.
The ledgers wherein the names of the subscribers to any of these loans are entered, and the regular records of transfers from one head to another, are kept in this department, which is also charged by Parliament to pay the dividends pertaining to the bondholders.
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The issue department was created in 1844; its institution being one of the conditions imposed upon the Bank by the Act of that year, through which so much advantage was derived by the Company.
The department is wholly devoted to the preparation, issue, and circulation of the legal paper currency of the country, represented solely by Bank of England notes. The Bank is obliged by Act of Parliament-.
(a) To buy any amount of gold bullion, at a fixed standard rate per ounce.
(b) To exchange its own notes into gold coin on demand.
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(c) To issue new notes for the old ones paid back to the Bank, which must be directly cancelled and put out of circulation; as no note is ever to be reissued.
The banking department transacts on a large scale all the business of an ordinary London bank, viz., keeping drawing and current accounts for customers, accepting deposits, discounting bills of exchange, etc.
It acts, besides, as a banker to the Government, cashing all the sums collected by Government officers for taxes, duties, excises, etc., and paying out such money as due by the Government for public services.
A peculiarity of the banking department is also the issue of the so-called bank post bills, which are a useful means for the transmission of money to any part of England.
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A bank post bill is a promissory note to order, payable at seven days’ sight, the amount of which may be cashed on maturity at any of the numerous branch offices of the Bank of England.
The Bank issues a post bill for any sum, not, however, below £10. Any person may obtain a post bill free of commission, or any like charge, by paying the sum into the Bank} and, as the document is accepted on delivery, its term of maturity begins to run from its date.
Bank post bills were instituted in 1738; they are issued only by the head office in London, and usually run in the following form:-
The Bank Return.-
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To facilitate Government control over the affairs of the Bank, it is enacted b_, law that an account called the Bank Return, and showing the financial position of the Bank, should be weekly- transmitted for inspection to the Royal Commissioners of Stamps and Taxes, and, upon their approval, directly published in the London Gazette.
The account is now drawn up in the form prescribed by the above-mentioned Bank Charter Act of 1844, and shows distinctly the state of the issue and banking departments, viz., the amount of bank notes issued and the corresponding amount of coin, bullion, Government bonds, and other securities existing as a pledge for the ready conversion of the notes.
It shows, also, the capital stock of the Bank, the amount of public and private money deposited in the banking a department, the outstanding debts (consisting of post bills and other promissory notes) as opposed to the money, stock, and other assets belonging to the Bank.
Privious to 1884 the account was rawn up in the old concise form prescribed by the above-mentioned royal charter, which is still preferred by some and published accordingly in a leading financial paper- the Economist.
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It is worth remarking here, in conclusion, that, owing to the immense popularity of this institution, it is simply called the Bank; and when speaking of bank notes, bank returns, bank rate, etc., the notes, returns, or rate of exchange issued or given by the Bank of England axe, meant, the others being distinguished by prefixing the full names of the banks to which they belong.